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Legal Services Regulation Bill 2011: From the Seanad

Wednesday, 9 December 2015

Dáil Éireann Debate
Vol. 900 No. 1

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Legal Services Regulation Bill 2011: From the Seanad

  The Dáil went into Committee to consider amendments from the Seanad.

Acting Chairman (Deputy Liam Twomey): Information on Liam Twomey Zoom on Liam Twomey There is a typographical error in the numbered list of amendments. Amendment No. 55 on the principal list of amendments, dated 4 December, refers to the deletion of "lines 21 and 34" on page 38, whereas the amendment made in the Seanad proposed to delete all of these lines. The text of amendment No. 55 should state: "In page 38, to delete lines 21 to 34, and in page 39, to delete lines 1 to 24."

Minister for Justice and Equality (Deputy Frances Fitzgerald): Information on Frances Fitzgerald Zoom on Frances Fitzgerald I would be obliged if, in accordance with Standing Order 140, the Ceann Comhairle directed the Clerk to make the following minor drafting corrections to the text of the Bill: on page 83, line 36, the words "a partner of or an employee in" should be replaced with the words "a partner in or an employee of". It is a tiny textual change. On page 99, line 32, the word "section" should be replaced with the word "paragraph". These corrections are being made in the interest of textural clarity and do not affect any substantive amendment.

Acting Chairman (Deputy Liam Twomey): Information on Liam Twomey Zoom on Liam Twomey Amendments Nos. 1, 2, 167 to 174, inclusive, 181 to 183, inclusive, 187 to 189, inclusive, 196 to 206, inclusive, and 265 are related and may be discussed together.

  Seanad amendment No. 1:

Section 1: In page 9, line 19, to delete “sections 85 and 87” and substitute “section 85”.

Deputy Frances Fitzgerald: Information on Frances Fitzgerald Zoom on Frances Fitzgerald Part 8 of the Bill deals with new business models provided for under the Bill. These are legal partnerships, which will come into effect in the second six months of next year, multidisciplinary practices, limited liability partnerships, LLPs, which are allowed for and dealt with in the Bill, and employment opportunities for barristers. The Bill as already amended in the Dáil provides for a system of regulatory oversight of such businesses by the new legal services regulatory authority. It will be recalled that amendments made to the Bill in the Dáil introduced a new research phase that must occur before multidisciplinary practices may come into existence. The essence of this aspect of the Bill's reform is that solicitors and barristers will be entitled to choose between any of a range of legal service delivery models, be they traditional solicitor or barrister models or the innovations I have just mentioned.

With regard to LLPs, I propose to introduce an option for solicitors' firms and legal partnerships to operate with the benefits of limited liability within an LLP business model, with the protection for the consumer in the form of both professional indemnity insurance and ongoing regulatory oversight by the authority.

The amendments include strong regulatory power for the legal services regulatory authority in regard to LLPs and the maintenance of a publicly available register of these. The new provisions define the circumstances in which the limited liability status is to be lost and provide for a claw-back of payments taken by partners when the liabilities of the business exceed the assets. Information is to be provided to clients and creditors in relation to the LLP, and the regulatory authority will have an enforcement power up to and including applications to the High Court to make directions on either the suspension or ceasing of authorisation to operate as an LLP.

The circumstances of the major regulatory overhaul being introduced in the Bill, together with the need to ensure new business models for legal services are given a fair wind in terms of gaining a foothold in the market, justify the introduction of LLPs in this jurisdiction. This can be justified in the face of any claims by other professional partnerships that they cannot access LLP status. Also, in order to eliminate any issues relating to non-legal partners in multidisciplinary practices being able to assume limited liability through MDPs, which they could not access within their own professions, it has been decided, for the time being and pending the research and public consultation to be conducted by the new authority regarding MDPs, not to include MDPs at this point in the LLP provisions.

I ask the House to support this group of amendments today. Amendment No. 1 is an amendment to section 1 of the Act which deals with the commencements of various sections and parts of the Act. It deletes the reference in section 87 in regard to multidisciplinary practices. As the House will know, it had originally been the intention to commence automatically the operation of multidisciplinary practices within a year of the consultation in this regard but it is now intended that the Minister for Justice and Equality will have the discretion to commence the operation of multidisciplinary practices at any time after the relevant consultation. This is in recognition of the fact that the consultation may bring to light some of the issues that will need to be catered for legislatively or organisationally before commencement. Therefore, an automatic commencement is not appropriate.

Amendment No. 2 sets out the date of coming into operation of the new legal partnerships model being introduced in the Bill. This is to be within six months of the completion of the relevant public consultation. This will allow for the new legal partnerships, which are barrister-barrister or barrister-solicitor partnerships, to be introduced within one year of the establishment of the new regulatory authority. I hope to see the first of these coming into existence before the end of 2016.

Amendment No. 87 inserts a definition of "limited liability partnership" into the existing section 84 as a reference point for the new Chapter 3 introducing LLPs, which is proposed to be inserted by amendment No. 196. It defines "limited liability partnership" as applicable only to a partnership of solicitors - for example, an existing solicitors' firm - or to the new legal partnerships, namely, the barrister-barrister or barrister-solicitor partnerships, being set up under the provisions of the new legislation.

Amendments Nos. 168 and 170 relate to sections 85 and 87 of the Bill as passed by the Dáil, which are very similar. They currently provide that no professional code that is a code of practice drawn up by a legal professional body such as the Law Society of Ireland or the Bar Council shall prevent a legal practitioner from providing legal services within a legal partnership or a multidisciplinary practice. Deputies will be aware that a legal partnership is a partnership between either solicitors and barristers or between barristers only. It is a new creature of this Bill that has been prohibited up to now under professional rules. Multidisciplinary practices are firms that will be able to provide both legal and other services together under one roof. These are currently prohibited under professional rules, and the Bill provides for their introduction, subject to the outcome of research and a formal public consultation process under Part 8.

I was advised by the Attorney General, whose advice I will paraphrase in general terms only, that the approach in the Bill, as published, which seeks to interfere directly with the professional codes of the legal professional bodies, is at high risk of, and vulnerable to, legal challenge on the grounds of undue interference with the professional bodies’ constitutional rights of association. The original sections would, in effect, dictate to the legal professional bodies the parties they may include and exclude from their membership. It is this, in particular, that opens up the provisions to the possibility of successful legal challenge. In fact, it raises constitutional issues. This is the advice I was given and which I brought to the Cabinet. The Cabinet supported the approach I was taking in the Bill.

In the interest of having the new regulatory and complaints structures up and running early and of introducing consumer choice through getting new legal partnerships up and running now, I introduced these amendments in the Seanad. I have chosen to provide that, as a matter of law, barristers and solicitors may provide their services through one of the new business models. They will have a statutory right to do so. Irrespective of the stance taken by any professional body, this right will exist as a matter of law.

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